Why the share of the acquisition of Spartan Energy fell on Friday


What happened

Actions of Spartan energy acquisition (NYSE: SPAQ), a special purpose acquisition company (SPAC) that agreed to merge with electric vehicle start-up Fisker, were trading lower on Friday after Fisker reported a potential problem in its plan to go into production for its Electric SUV.

At 2:45 p.m. EDT on Friday, Spartan shares were down about 12.2% from Thursday’s closing price.

So what

Los Angeles-based Fisker has developed a premium electric SUV called Ocean, which he aims to put into production by the end of 2022, using technology from a major automaker. Spartan and Fisker have agreed to merge in a deal similar to the one that required starting an electric truck Nikola (NASDAQ: NKLA) public in June; the deal is expected to close in the fourth quarter of 2020.

Auto investors expect Fisker’s major automaker partner to be Volkswagen (OTC: VLKA.Y), which developed a very flexible electric vehicle architecture (called MEB) which it offered to license. Indeed, Fisker negotiated with VW to use the MEB architecture for the Ocean.

Fisker plans to put its Ocean electric SUV into production by the end of 2022. But his plans may have run into a problem. Image source: Fisker, Inc.

Fisker expected to have a deal with VW signed by the end of July. But in a road show scenario filed with the Securities and Exchange Commission on Friday morning, he said he had yet to strike a deal and talks with VW would not resume until September.

(Roadshow script details were first reported by The Verge.)

The implication is that Fisker’s production plan, or at least his production schedule, may now be in jeopardy. That’s why Spartan’s stock was down on Friday.

Now what

After Spartan’s stock slump began, Fisker founder and CEO Henrik Fisker took to Twitter to say his company was in talks with several major automakers (OEMs in industry parlance), not only with Volkswagen:

I’m not sure this tweet had the effect Fisker wanted. In fact, things seem even more uncertain than this Friday morning. I expect investors to get another update when Spartan releases its second quarter results, possibly later in August.


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